Tag Archives: Department of Business

Have cake and eat it strategy abandoned due to lack of bread

“The social enterprise sector spends a lot of time justifying itself by using the estimate of that there are 68,000 social enterprises. But it doesn’t question, firstly, whether the figure is accurate and, secondly, if it is, what the figure actually shows us.”

At first glance this may appear to be a quote from another needlessly pedantic blogger or academic, questioning the honourable attempts of the government and the social enterprise lobby to spread the good news about the inexorable growth of social enterprise in the UK. At second glance, it is in fact a quote from Lucy Findlay, Managing Director of the Social Enterprise Mark Company.

The estimate that there are 68,000 social enterprises in the UK comes from the Annual Small Business Survey (ASBS), conducted by the Department of Business, Innovation and Skills (BIS).

This is the criteria by which BIS decide whether an organisation is a social enterprise:

  • no more than 75% of turnover is generated from grants and donations
  • no more than 50% of any surplus is paid to shareholders (or never generate a profit
  • the business owner thinks of the business as a social enterprise, and
  • the business owner thinks the business is a very good fit to the definition “A business with primarily social/environmental objectives, whose surpluses are principally reinvested for that purpose in the business or community rather than mainly being paid to shareholders and owners”?

A previous ASBS found that there were 62,000 social enterprises in the UK and this figure was used prominently what was then the Social Enterprise Coalition now Social Enterprise UK (SEUK) and the New Labour government for several years.

When Lucy Findlay says that ‘the social enterprise sector’ doesn’t question the accuracy and meaning of this figure she’s either short of information or using a narrow definition of the social enterprise sector that excludes me, some of the UK’s leading social enterprise academics, and leading social enterprise support charity, Unltd.

The problem isn’t with the ASBS – which provides credible statistics based on clearly explained criteria – but with the fact those statistics have been prominently promoted by social enterprise support organisations that define social enterprise by very different criteria.

So, the criteria for Social Enterprise Mark holders are:

A. Have social and/or environmental objectives

B. Be an independent business

C. Earn 50% or more of its income from trading

D. A principle proportion (50%+) of any profit made by the business is dedicated to social/environmental pruposes

E. On dissolution of the business, all residual assets are distributed for social/environmental purposes

F. Can demonstrate that social/environmental objects are being achieved

So far, 462 organisations have been awarded the Social Enterprise Mark.

Regular readers may be aware that I’m not really a big fan of the Mark but despite my own opposition to the venture, I very much admire Lucy Findlay for her dedication and committment to a project that she believes to be socially useful. I also partly sympathise with her predicament on this point.

While Social Enterprise UK’s current team are not responsible – and those who werre responsible were clearly acting with the best of intentions – it is deeply regretable in terms of the credibility of the sector that the organisation that was then the Social Enterprise Coalition, as a co-owner of the Social Enterprise Mark company, found itself in the position of simultaneously promoting two significantly different definitions of social enterprise – one of which was purportedly the method for social enterprises to ‘prove they are genuine against a set of qualification criteria’.

It’s equally regretable for the Social Enterprise Mark Company, who have found themselves theoretically trying to sell their product to a clearly-defined target market of over 60,000 organisations when in reality the vast majority of those potential customers would be turned away if they attempted to buy the product. Of course, the chances of the Mark project receiving £964,000 worth of grant-funding from the combined pockets of Big Lottery and the government may not have been enhanced by a realistic assesment of the scale of social enterprise, as defined by Mark supporters, at that time.

At this point, we can be quite clear that there are at least 462 social enterprises in the UK and that there may be hundreds of thousands more than that, depending on your chosen framework for definition. In the 2009 – 2011 period, I found it difficult to understand how so many otherwise sensible people in the social enterprise lobby could justify the apparent ‘have your cake and it eat it position’ that there was need for significant government spending on supporting social enterprises but less than 462 social enterprises – less than one per parliamentary constituency – worthy of support. Even being charitable, this position apparently involved believing that over 60,000 organisations were waiting to apply for the Social Enterprise Mark and would do so once they got around to it.

No there is no money for social enterprise support – and the current government has no desire to promote ‘the social enterprise’ as a model – so the ASBS figure, though its meaning is entirely unchanged, is now virtually irrelevant. On the plus side, it means that what’s left of the social enterprise lobby is free to get on with promoting the social enterprise as a diverse social movement in all its glorious, hopeful messiness.




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